The Federal Reserve Bank in Atlanta released a revised Gross Domestic Product (GDP) growth estimate this morning, and it’ll blow your mind. They lowered their expectations for the American economy from a -40% growth rate yesterday to -51.2% today.
It’s important to note that this is not an official forecast by the Atlanta Fed, but rather a running estimate based on newly released economic data. From their report:
Latest estimate: -51.2 percent — May 29, 2020
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2020 is -51.2 percent on May 29, down from -40.4 percent on May 28. After this morning’s Advance Economic Indicators report from the U.S. Census Bureau and personal income and outlays release from the U.S. Bureau of Economic Analysis, the nowcast of second-quarter real personal consumption expenditures growth decreased from -43.3 percent to -56.5 percent and the nowcast of the contribution of change in real net exports to second-quarter real GDP growth decreased from 2.07 percentage points to 0.73 percentage points.
Note the reason they cite: sharply lower estimates for personal spending, and sharply lower exports. Global economic activity will continue at very low levels as well, blunting demand for our products overseas.
The damage we’ve done to our economy won’t fix itself right away. These are unprecedented numbers in the entire history of keeping economic statistics. First-time jobless claims continue to roll in at eye-popping numbers—2.1 million last week, over 40 million total since widespread lockdown orders in response to the CCP coronavirus pandemic took a meat ax to economic activity in America.
Yesterday’s jobless claims report brought a bit of hope, as continuing jobless claims fell by more than 3 million, to a total of 21 million. That means some folks are headed back to work.
With continuing resistance to reopening in many states, however, combined with strict restrictions on large gatherings, any economic rebound will come in fits and starts. At best. Nobody can really say what will happen, though, because we’ve never deliberately shut off our economy for this long.
If the Atlanta Fed estimate is any indication, we’re in for a bumpier ride than any of us imagined.
Jeff Reynolds is the author of the book, “Behind the Curtain: Inside the Network of Progressive Billionaires and Their Campaign to Undermine Democracy,” available now at www.WhoOwnsTheDems.com. Jeff hosts a podcast at anchor.fm/BehindTheCurtain. You can follow him on Twitter @ChargerJeff.
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